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Telco Appeals Minnesota City's Fiber-Optic Win 162

tsa writes "In a predictable move, TDS Telecom has filed an appeal after its complaint against Monticello, Minnesota's new fiber network was tossed by a county judge in early October. As you may remember, the city decided to build its own fiber-optic network after the telco made it clear they wouldn't build it because it wouldn't be economically feasible for them. TDS Telecom then changed its mind and sued the city for unfair competition."
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Telco Appeals Minnesota City's Fiber-Optic Win

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  • wait wait wait (Score:5, Interesting)

    by neo8750 ( 566137 ) <zepski.zepski@net> on Saturday November 08, 2008 @12:20PM (#25687849) Homepage
    So they refused to build one. Then the city said well we are gonna build one and proceeded to build it. Then they sued the city because they built it?

    I don't see how they could unless the city made a law(replace with proper term) to not allow the building of another.

    Because that's like me going to a store with 100 tacos getting to the front and saying "wow that's to much for my blood" then getting out of line watching 100 other people go through the line and once they are out of tacos going "Hey wait a minute i don't think its fair i didn't get a taco.

    P Thats my 2 cents and no i didnt RTFA

    • by causality ( 777677 ) on Saturday November 08, 2008 @01:23PM (#25688257)
      I wish state governments would start revoking the corporate charter of companies that behave this way, as it is clearly manipulative and costs a great deal of money and wasted time while benefitting no one. As others have pointed out, the telco probably has no interest in actually building a fiber network, they just want to delay this process and make it as expensive as possible because they see this as a threat to their monopoly. They had their opportunity to build it if they wanted to -- the city consulted them first before it decided to build anything. That alone should absolve the city of any further obligation. The telco made their decision when they had every opportunity to make a different one; that's tough shit, let them accept the consequences of that decision.

      The goal should be to deliver a high-speed fiber optic network, with or without the telco in question. Petty squabbles like this are probably a big reason why the USA is so far behind many other countries in terms of bandwidth speed and availability. Corporations seriously need to be sent a message (before it's too late, if it is not already) that they are here to serve us, that their interests have the lowest priority when they are at odds with those of the community and that they will be gone the moment they stand in the way of advancement. Any damage that could possibly be done by revoking their corporate charter, seizing their assets and selling them at auction (or however it would be done), and replacing them with a more reasonable provider is nothing in the face of setting such a good example.
      • by Anonymous Coward on Saturday November 08, 2008 @02:12PM (#25688557)

        the city of Tacoma in Washington state was able to lay their own fiber. As a result they city has turned a good profit from leasing the fiber to local ISPs. Comcast and QWest can't even compete in terms of speed and pricing. There is NO THROTTLING AND NO CAP!!! Every city should do this. The money they make from leasing their own fiber far outweigh any benefit those ISPs can bring to the city.

      • Re: (Score:2, Informative)

        by Anonymous Coward

        Corporations seriously need to be sent a message (before it's too late, if it is not already) that they are here to serve us, that their interests have the lowest priority when they are at odds with those of the community and that they will be gone the moment they stand in the way of advancement.

        The problems are:
        1) Because of the legal basis for a corporation, they aren't here to serve the community, their customers, or humanity; they're here to serve the stockholders.
        2) Due to lobbying and corporations' co

      • I'm in India right now and for a country that is unable to provide clean tap water to any of their cities, a place where the power goes out at least once a day (even in the nation's capital), the internet beats the US. Even when the power goes out, many businesses and residences have UPS and generators.

    • Re:wait wait wait (Score:4, Interesting)

      by sumdumass ( 711423 ) on Saturday November 08, 2008 @01:54PM (#25688453) Journal

      I think your forgetting a couple of steps here.

      First, you not going into a certain line of business because you can't see the return is not the same thing as an open bidding process for a government to go into the same line of business. Second, there are a lot more then owning the network that needs an open bid process, construction, use of existing right of ways and so on all ne to go through an unbiased open bid process.

      You see, building it for me might not be profitable enough to justify the expense. But building it for you might be more then profitable enough. Adn when you are a government, even though I didn't want to build it for me, you still have to include me in the open bidding process to build it for you. The impression I'm getting here is that the telecom was shut out of everything because they didn't want to build it for themselves. And yes, that does present a problem because a government contract shouldn't be dependent on doing something for the government at your expense.

      • Re: (Score:3, Interesting)

        by Zigurd ( 3528 )

        It is perfectly fair for a government letting a contract to limit that contract to entities that are not suing it. That's like an arbitration clause in a contract.

      • Re:wait wait wait (Score:5, Insightful)

        by sjames ( 1099 ) on Saturday November 08, 2008 @02:30PM (#25688661) Homepage Journal

        They were asked to deploy the fiber for the residents of the city. They said no. The city then decided to do the deploying itself for exactly the same people in exactly the same place.

        City to whiny spoiled brat of a company: "you snooze, you loose".

        This is part of a recurring pattern of corporations with an inflated sense of entitlement expecting for people to wait around in the dark ages until they ever so graciously choose to let them pay them for entrance into the 21st century. If the people decide that self help is in order, the companies suddenly whine to the courts that it cuts into their profits (that they had no plans to work for).

        If the telecom wanted to be the ones contracted to roll out the network, the suit would allege that the bidding was rigged or that they were not given a fair chance to bid. Instead, they're claiming that it is illegal for the city to contract to build such a network AT ALL with ANYONE.

        In other words, they didn't want to build the network, but DID want the area to remain without one just in case they changed their minds.

        Consider, if an independent group of citizens have the right to form a co-op, they also have the right to vote that their existent government be that co-op. They chose the latter by a decent margin in a referendum.

        • Re:wait wait wait (Score:5, Interesting)

          by Belial6 ( 794905 ) on Saturday November 08, 2008 @05:34PM (#25689807)
          I agree with you.

          I do however think that a better solution than the city building the fiber network would be for the cities to build data conduits. They already run multiple conduits through cities. Sewer, Water, Storm Drains, perhaps even gas lines. Cities know how to run conduit. As far as I know, there are no entities in the US that currently run data conduit for public use within the US.

          So, if the city built a conduit system similar to the storm drains, but reserved it for use as a data conduit, they could rent out that space to ANYONE that wanted to run data lines. Whether that is for telephone, internet or cable. This would allow true competition for telephone, internet and cable within their cities, while keeping down the long term costs of ripping up streets to do maintenance. This would also be a boon to local businesses that wanted secure dedicated lines. If a hospital in town wants a secure line to a lab clinic a few miles down the road, they could have an honest to goodness dedicated line run directly to the destination point. If a local ISP wants to start selling 100 megabit internet connections, they can run their own lines.

          Best of all, if some new tech comes out that requires a different kind of cabling, then it doesn't require digging up all of the streets in the city to get it deployed. It is just a matter of pulling new cable through the existing conduit.

          The city doesn't have to worry about these kinds of lawsuits. The city gets to charge rent on the conduit. And the residents get a much better chance of having the latest and greatest technology in their neighborhoods.
          • by sjames ( 1099 )

            Conduits with room to spare are a good idea. Even with that in place, it doesn't hurt to run a cable while they're at it. The capacity of long-haul fibers is absurdly high, so it's fairly likely that one cable (carrying 24 pairs) would be leased out to several companies.

            With the latest equipment, a single pair can carry 128 channels and each channel can carry 10 Gbps.

            A big reason I suggest running 1 cable along with room for plenty more in the conduit is to act as a sort of 'seed' Manyu companies don't real

            • by Belial6 ( 794905 )
              When I am talking about conduit, I am talking about a 3 to 6 foot conduit. So, yes room to spare. Personally I don't think that fiber has even close to the bandwidth necessary to take us into what should be our near future. I should be able to pay for a 10 Gps fiber cable dedicated to me alone if I am willing to pay the rent on the tubes. With a 6 foot conduit, it would be feasable for my local ISP to run that cable to me. But at that point we are splitting hairs. When you can just pull more cables, w
    • I interpret this more like this:
      We won't be profitable building this network, so we won't without subsidies from the city. But the city figured building their own network would be cheaper. Now they're suing for the privilege of keeping their prices up.

    • by hey! ( 33014 )

      Well, the fact that they don't want to build a fiber network doesn't mean they aren't selling network services in the city. They might be selling DSL or cable Internet, and the city fiber infrastructure would certainly put that business out of service.

      It gets down to philosophical differences about economic value and the role of government. According to one point of view, the government should above all do no harm to any business. If a business wants to sell government weather data, the government oug

      • Re:wait wait wait (Score:5, Insightful)

        by Y.A.A.P. ( 1252040 ) on Saturday November 08, 2008 @05:49PM (#25689901)

        It gets down to philosophical differences about economic value and the role of government. According to one point of view, the government should above all do no harm to any business. If a business wants to sell government weather data, the government ought to make it hard for individuals to get the data directly. By the same token, if a private company wants to provide network services in an area, the government has no business providing better or cheaper services.

        That is one point of view regarding government, but there are others.

        In this case I would say that the more relevant point of view is this: A government's purpose is to use the resources available to it to provide as best as it can for its citizens.

        That is exactly what this city government was doing. The first attempt to do so included its corporate citizens, an attempt to utilize and provide for a corporate citizen while providing for the normal citizens as well. The corporate citizen decided against benefiting from that help.

        The government moved on with a plan to benefit all the other citizens, and now the corporate citizen is trying to stop the government for providing for any of its citizens.

        And that is where the corporate citizen is completely in the wrong. Not only did it opt out of getting greater benefits before, but it could still lease bandwidth in the new system to remain competitive. Their profits won't be as high as if there were no competition on the fiber network, but they can still make a profit. Instead, they want to interfere with the proper role of government so they can maintain their profits (or expand them) at the cost of the other citizens.

        From this point of view, the corporate citizen is clearly doing wrong to both the government and the citizens that that government is responsible for. In that point of view, the corporate citizen should be removed from where it can do further harm to that government and its other citizens (much like how we send people to prison when they assault other people).

        Hopefully, the courts will also see things from this point of view and act appropriately.

  • just like kids (Score:5, Insightful)

    by Anonymous Coward on Saturday November 08, 2008 @12:32PM (#25687915)
    Mom: Who wants the blue cup?
    Kid1: I want the yellow cup.
    Kid2: I want the blue cup.
    Kid1: (screaming) No! I want the blue cup!
  • I call BS (Score:2, Informative)

    by SnatchMan ( 1062110 )
    This is the company with a monopoly on [some|most] of rural MN telecommunications and broadband...
  • by girlintraining ( 1395911 ) on Saturday November 08, 2008 @12:38PM (#25687961)

    I live just outside Minneapolis, and I can't really blame them. Nobody up here thinks much of Monticello... Most minnesotans couldn't even find it on a map. That said, how is this "unfair competition"? They had their chance and they biffed it. They might have something to say if the city won't give them easement to lay their own fiber, at their own expense... But I'll lay odds that what they really want is access to the city's fiber network without paying for it. Good luck with that!

    • by NormalVisual ( 565491 ) on Saturday November 08, 2008 @12:49PM (#25688041)
      I'd bet they simply don't want the prospect of any competition, since it will be substantially easier for any ISP to offer service to the city's residents. The city will be offering access to its network for any provider willing to pay for the interconnect, so there's a very low barrier of entry for any given ISP in that market.

      IMO, this is *exactly* how Internet service should be offered in the US - solid public infrastructure to the customer site, and let all the providers compete to transport the individual customer's traffic from the local net to the Internet proper.
      • by BoberFett ( 127537 ) on Saturday November 08, 2008 @01:49PM (#25688425)

        Even as a libertarian, I agree 100%. There are some things that government can do better than private companies. Anything which requires a physical connection to every location and where duplication of that physical medium is not cost effective. Roads, water, sewer, and now telecom.

        We need to move to a new model where the local government (local mind you, not state or federal) needs to own the physical lines and ISPs can purchase access to those lines.

        • by Firehed ( 942385 ) on Saturday November 08, 2008 @03:02PM (#25688845) Homepage

          I'll second that. The problem is that we did the first part of that (laying down the infrastructure on the government's, and thusly the taxpayer's dime) without the second (allowing providers to lease the lines as customers sign up). Which is to say that we got close, but forgot that model doesn't work when there's a single provider which then buys out exclusive service providing rights over those government-laid lines.

          If Verizon wants to lay down fiber and then have exclusive control over said fiber, fine. But I just find it remarkable how we've managed to fail so completely at not granting monopolies over the infrastructure that we paid for.

          I envision something like a modernized equivalent of the old telephone switchboards - tons of patch panels in a (state/city/town-owned) room that go out to local homes, and each ISP in the area gets a switch in the room. When a customer signs up with an ISP, they get a patch cable going from their house to the ISP's switch. If they change ISPs, just move the patch cable to a different switch. The city leases these lines out to the ISPs at, say $5/mo, which then comes out of your monthly bill to the ISP (NOT tacked on top like the bullshit that the cell companies do - that should be illegal) to help pay back the costs that went into laying down the lines in the first place. After the costs have been repaid, then the monthly lease cost goes away (or way down to just match the cost of keeping this giant switching closet running) - the lines will NEVER be sold to an ISP, just leased at-cost.

          Of course I'm not a networking expert so tweak that accordingly, but you get the general idea. Seems very fair to the consumers/taxpayers (hate using either term talking about normal people, but they certainly apply here), reasonably fair to the ISPs (they might not be able to extort to their current levels, but they'll absolutely turn a profit), and it stops private companies from having absolute control over the infrastructure running to your house. I'm definitely no fan of government running things, but this seems like an appropriate use of them IF IMPLEMENTED CORRECTLY.

          • I agree. Unfortunately, this would require our government /not/ granting monopolies to large corporations, which sadly is not an American specialty these days.

            This would increase competition, and we have a strange system where the companies will collude to prevent competition (think carving out their own little domains).

        • We need to move to a new model where the local government (local mind you, not state or federal) needs to own the physical lines and ISPs can purchase access to those lines.

          Heck, I'd settle for letting private corps do it all, but make them choose one or the other. Regulate it such that they can either A) install, maintain, and operate the physical fiber, or B) buy bandwidth from the former to provide [Internet|Phone|TV|*] service to connected individuals. The problem we have now is that the telcos have been allowed to do both by default because in the analog olden days of Plain Old Telephone Service, the physical circuit was intrinsically tied to the communication service. So

    • by vistic ( 556838 )

      Off topic... but I grew up in Eden Prairie but moved away years ago during high school.

      I always referred to portable toilets as a "Biff" since that's the ubiquitous name on all of them in the area.

      Is that where "biffed it" probably comes from? If so, that expression itself is probably also very Twin Cities specific.

  • by Anonymous Coward on Saturday November 08, 2008 @12:38PM (#25687963)

    With its public roads and fire stations, the government also killed private toll-road builders and private firemen through unfair competition. Where are we headed to?

    • by istartedi ( 132515 ) on Saturday November 08, 2008 @02:49PM (#25688763) Journal

      A laissez-faire approach was tried first for some of these things. Roads and firestations are not as compelling an example as old-school telecom is. I've seen pictures of telecom and power systems prior to the granting of the Bell monopoly: There were poles with 20 wired cross-members on them. Google around, there must be a picture of it somewhere.

      Some things are "natural monopolies", where the entry of multiple players would be so contrary to the general good, that government must step in. Roads, firestations, and telecom infrastructure are all great examples.

      • Re: (Score:3, Funny)

        by MightyYar ( 622222 )

        There were poles with 20 wired cross-members on them.

        YOU MEAN THEY SHARED A POLL? Communists! When will the free market be given a chance?

  • by Max Romantschuk ( 132276 ) <> on Saturday November 08, 2008 @12:38PM (#25687969) Homepage

    Really, what is the fscking problem? If the city wishes to build a network it should be allowed to, period.

    A real debate would be worth it if the city refuses to license bandwith on that network to operators...

    • Re: (Score:2, Informative)

      by Quarters ( 18322 )
      The city probably has a legally binding franchise agreement with the telco that says that for certain concessions, most usually guaranteed quality levels for service to residents and competitive prices, that the telco may maintain a legal monopoly in the city. Once the telco said they would finally build the fiber network the city was more than likely in violation of an agreement they signed.
      • by Ihmhi ( 1206036 ) <> on Saturday November 08, 2008 @01:18PM (#25688225)

        According to TFA (and TF previous /. stories), they don't have any such agreement. They were suing just to try to stifle competition - ironically because they said such competition was uncompetitive.

        If you understand any of that, you may have a future career in law!

      • Re: (Score:3, Insightful)

        by Khyber ( 864651 )

        Umm, no.

        City to Telecom :"Build us a fiber network"
        TC to City: "No, fuck you."
        C to TC: "Fine, we're laying our own"
        TC to Judge: "Unfair competition!"
        Judge: *looks at monopoly status, decides case is meritless on the grounds of 'unfair competition'*

        The TC has NO BUSINESS telling a government entity what to do when it comes down to public works and utilities. If the city is making a fiber network as a public utility, the TC has no rights, period. The city may create and deploy it's own network as it sees fit

  • by Golddess ( 1361003 ) on Saturday November 08, 2008 @12:47PM (#25688021)
    LITTLE TOWN: "Hey BIG CORP, you gonna build fiber in our little town?"
    BIG CORP: "Nope."
    LITTLE TOWN: "Ok. *to everyone* Hey everyone, lets build our own fiber network!"
    EVERYONE: "Ok!"
    BIG CORP: "Hey, you can't do that! We'll sue!"

    *BIG CORP sues LITTLE TOWN, faces JUDGE*

    JUDGE: "So let me get this straight, you're suing LITTLE TOWN for doing something that you never intended to do yourself?"
    BIG CORP: "YUP!"
    BIG CORP: "We appeal!"

    That sound like the jist of it?
    • by Albanach ( 527650 ) on Saturday November 08, 2008 @12:57PM (#25688087) Homepage

      Well except there's a bit more of an agenda.

      You see they're not suing to win - they're suing to delay.

      Maybe they'll be in a position to roll out something cheaper like wimax while still suing the county. Maybe newer technology will come along and allows them to deploy faster connections while the county is still being delayed by the lawsuit. Maybe the county will just give up due to the legal costs.

      All the company cares about it making the process as long and as expensive as possible. Even if they don't win here, they might put off some other upstart city from doing likewise.

      • by Sniper98G ( 1078397 ) on Saturday November 08, 2008 @01:21PM (#25688237)

        The Telco has used the time that they have delayed the cities project to begin laying its own fiber network. This is the very same fiber network that the city original requested to be installed.

        At this point, due to the legal delays, the Telco's network is now further along than the cities. I think that they are hoping that if they can keep the city tied up for long enough then the residents will jump on their network because it's done.

        I personally hope that the residents can see the advantages of their municipal plan and how it can create grater competition leading to better service for consumers.

        • by ragefan ( 267937 )

          The Telco has used the time that they have delayed the cities project to begin laying its own fiber network. This is the very same fiber network that the city original requested to be installed.

          Nothing a few misplaced backhoe shovels can't fix while the city catches up building their network behind TDS.

          Also, I agree that hopefully the citizens of this city choose to support their city (not to mention their tax money paid to create the network) and use the municipal fiber lines.

        • The city should just go along with them until they lay all the fiber. Then they should use eminent domain to just take over the fiber and give ownership of it to the town.

          Any additional actions like sending the company a box of dead rats in the mail are entirely optional.
      • by poetmatt ( 793785 ) on Saturday November 08, 2008 @01:22PM (#25688247) Journal

        Well, not quite true about the delay at all. The delay period is already over. As soon as the judge made his decision, Minnesota can do anything that they want up to the day of whenever an appeal decision is made. Even if an appeal does favor the shitty telco. Most state constitutions have laws that say things like "if you did something when it was legal, you can't repeal it later".

        Expensive and long process? Definitely. Will they put off another city? Not if the appeal fails. In fact, the fact that this article is a slashdot headline indicates that the US is watching, thus the decision will affect other states decisions to build out networks or not. Establishing precedence, etc is a big deal and can occur due to an appeal.

        Methinks you want to be more careful with the information you put out.

      • by Anpheus ( 908711 )

        Then the city should ask that if they are required to be delayed, then the telco should as well so that they do not receive gain from what will likely end up being a frivolous, baseless lawsuit.

        I am not a lawyer, but does such a mechanism exist in the legal system or would the city have to counter-sue?

      • Still, just because they're a corporation it doesn't give them the right to file suit to stop a municipality from building this out.

        If sanity should prevail I hope they lose their appeal too. They have no case.
  • by Concerned Onlooker ( 473481 ) on Saturday November 08, 2008 @12:51PM (#25688051) Homepage Journal

    What the telco really means is that it wants no competition.

    • by Bieeanda ( 961632 ) on Saturday November 08, 2008 @12:58PM (#25688097)
      Essentially. Laying fiber isn't worth it to them, since they've got a stranglehold on service and no reason to compete. The city doing it is probably a major threat to their bottom line, since they weren't anticipating it.
      • by cgenman ( 325138 )

        The telco probably doesn't care very much about *this* city. The telco is probably attempting to prevent thousands of other US cities from waking up and saying "We can do that?"

    • by Narpak ( 961733 ) on Saturday November 08, 2008 @01:19PM (#25688227)

      What the telco really means is that it wants no competition.

      Isn't the entire idea behind a free market to that there should be competition? And if a city/county want a service that isn't available then creating that service for themselves seems like a good idea. Personally I think this type of behaviour from a company, doing things that is definitely not in the interest of the customer and the citizens; should be penalized.

      • by jimicus ( 737525 )

        What the telco really means is that it wants no competition.

        Isn't the entire idea behind a free market to that there should be competition?

        And the entire idea behind a monopoly is that you can set the prices to be more-or-less what you like.

      • Re: (Score:3, Insightful)

        by sumdumass ( 711423 )

        There are some places where you simply can't have a free market and the same goals of government. This is why Utility companies end up with monopolies and lockout franchises.

        Imagine if you had 20 companies delivering water, how would all those pipes run through the city and how would you know which ones went to your house. Imagine the same for sewage disposal, how could they tract a leak down to one specific pipe. Now imagine all the over head wires if 20 different electric companies participated in the sam

        • by leenks ( 906881 )

          Now imagine all the over head wires if 20 different electric companies participated in the same city. Somewhere, the free market has to be put aside because of other facters that need to be controlled.

          Here in the UK we have dozens of suppliers of electricity, gas and telephony available to anyone (for the most part - telephony is lagging, but is slowly getting therE). I can switch my supplier at any point and my service is provided by someone else, over infrastructure owned by a third party.

          • by sumdumass ( 711423 ) on Saturday November 08, 2008 @03:04PM (#25688863) Journal

            The infrastructure was provided by a monopoly. Things might appear differently now but the truth is that at one time, it was and it still is if only one entity owns the infrastructure that the different services use. In the UK, it might be the government who owns it, but the point is that a free market isn't there because at least one aspect isn't free.

            • Re: (Score:3, Interesting)

              by deraj123 ( 1225722 )
              However, this system has the benefit of paring the monopoly down to as small an aspect as possible. This system shows that there's no inherent need to have a monopoly on the service. The only need for a monopoly is on the infrastructure. Therefore, that's the only aspect of the business that should have a monopoly, and the other parts of the business can be opened up to the free market.
              • You do realize that in that system, I can't offer docsis9 support over fiber (something I just made up) unless the monopoly in charge has laid the proper cables and such allowing me to. SO by essense of the one area not being free, it isn't a free market.

                Lets look at this another way. Suppose I have the only shipping company in the world and I only provide one shipping container size. Now you can claim that making a product and shipping it to the customer is a free enterprise but you will be limited to the

  • by jfengel ( 409917 ) on Saturday November 08, 2008 @01:16PM (#25688205) Homepage Journal

    The telco did an analysis and determined that the project could not be done profitably. Governments are in the unique position of not having to turn a profit. Their "customers" are taxpayers, and legally required to pay whatever the government tells them to pay. Even the ones who don't want the particular service the government is about to provide.

    The taxpayers can be astonishingly obtuse about that connection, clamoring for bread, circuses, and cheap fat pipes, and then griping when their taxes go up to pay for it. Or pulling money from other areas, like roads or education, without actually realizing why they have to make that tradeoff.

    I can't help the obtuseness of taxpayers, and if they're (collectively) for building a fiber network then the telecom shouldn't be in a position to stop them. It's a privilege of government to force everybody to do what a majority wants, because often there's a profit of scale that goes beyond the obvious returns. Better education with kids doing research over high-speed lines? More web startups? Simple better quality of life?

    Still, I think that the telco's suit is not as unfounded as the previous comments suggest. It's reasonable for them to at least make clear to the taxpayers that "government-funded" and "free" aren't the same, and that the confusion between the two can cause unfair competition.

    • by lenski ( 96498 ) on Saturday November 08, 2008 @01:41PM (#25688385)

      Profit is not a bipolar concept. The telco probably concluded, possibly correctly, that building fiber infrastructure would not provide adequate ROI. That's perfectly within their rights.

      The community probably concluded, possibly correctly, that building fiber infrastructure would provide adequate ROI. That's perfectly within their rights.

      As soon as the telco decided not to build the network, their participation in the decision was OVER. Their decision not to bother terminated their part of the discussion.

      Bringing in the "clamoring for bead, circues, and cheap fat pipes" may be valid argument, but there's no guarantee that just because Government Does Something that it is guaranteed to be inefficient, or have inadequate ROI for the community.

      Bringing a suit after the fact is bogus, unless they can show evidence that the community committed fraud during the original discussions about costs and revenue sharing (for example). So I agree with the earlier comments about the suit being unfounded: Absent evidence of governmental shenanigans, the suit bogus.

    • Re: (Score:3, Insightful)

      but i think there is a question of standing. you're not really allowed to file a suit just to teach someone a lesson. there isn't a contractual realtionship between the city and the company. why should the company be allowed to use the courts to undermine the city's plans?

      if you want to make an argument about public services and funding use the political arena

      • by PPH ( 736903 )

        There is such a contractual agreement. In the utility biz, its called a franchise. It is a contract allowing the utility to utilize the public rights of way in return for certain considerations. Principal among these is a requirement to serve all customers requesting such service within the designated territory. The franchise may allow compensation to be provided in the event that the cost of such service exceeds some defined return on equity calculation.

    • by schon ( 31600 ) on Saturday November 08, 2008 @01:48PM (#25688423)

      The telco did an analysis and determined that the project could not be done profitably.

      So, what you're saying is that the telco has now (by beginning their own fibre build) invited a lawsuit from their shareholders because they engaged in a project that they *knew* would not turn a profit?

      Please excuse me if I take your post with a rather large grain of salt.

      • by sjames ( 1099 )

        More likely, they felt they could make more profit by keeping the area back in the 20th century and not spending on infrastructure would. They didn't count on the people there balking at that idea.

        Now that it's clear to them that they made the wrong decision, they want to sue for a do-over.

      • Turn a profit relative to what is the big question.

        In a monopoly situation to make it worth the monopolies while to upgrade infrastucture means the cost of the new infrastructure has to be covered by the difference between profits with the old infrastructure and profits with the new. Of course this is unlikely since people won't generally pay that much more for higher speeds.

        The city putting in thier own network changes the game completely. The telco then are put in a situation where if they don't manage to

        • by schon ( 31600 )

          Turn a profit relative to what

          Uhh, not turning a profit?

          Profit is the amount of money you have after your expenses, therefore it's wouldn't be "relative" to anything. You either have profit or you don't.

          jfengel said that there was no profit (note, that's *NONE*, not "not enough".) If they go ahead and do it anyway, then they're violating their corporate charter.

          • When people speak of "profit", sometimes they speak of the gross margin (as you are).

            Companies only care a little about this. They care a lot more about a rate of return. The telco probably put in some equipment 10 years ago, they're getting 10% return. Laying fiber would take a lot of capital, and the rate of return would be less for a considerable amount of time. So they decline to upgrade their infrastructure.

            So the original poster was right. It's not a matter of making a profit or not, it's "This

    • by igb ( 28052 )
      The argument that nothing's free is one that taxpayers can make. You don't need companies helpfully making the point as an act of charity.
    • Re: (Score:3, Interesting)

      by jcartaya ( 51188 )

      It is hard to believe the Telco is suing to educate taxpayers about the difference between "government-funded" and "free".

      It is far more likely that the Telco is already entrenched in that town, and when aproached by the city they requested "additional incentives" to build the network. When the negotiations broke over this issue, the government decided to do it on their own, and the Telco sued because they will lose to the fiber once it is laid down.

      Having said this, it is not unlike a gas company suing a c

    • by sjames ( 1099 )

      If you make clear that you have no intention of doing something (for any reason or even for no stated reason), then someone else doing it (even a government) is not competition at all.

      Profitability is also different between a group of citizens and a company. If the improved infrastructure helps schools and attracts employers into the area, the city gains a wider tax base and the citizens gain a more prosperous community and better education for their children, neither of which a company would count as a ret

    • by rhizome ( 115711 )

      The telco did an analysis and determined that the project could not be done profitably. Governments are in the unique position of not having to turn a profit.

      If there's something that the people want but cannot be done successfully for a profit, then it's entirely reasonable for the government to be the one who does provide it. Market failures arent always due to a lack of demand, sometimes it's a failure to sell. A for-profit company is not going to take on a non-profit enterprise.

  • Bye-bye TDS (Score:5, Interesting)

    by HikingStick ( 878216 ) <> on Saturday November 08, 2008 @02:01PM (#25688485)

    My company has TDS as an Internet service provider, and I've not been impressed with their service of late. This takes the cake. I am the decision-maker at my workplace, so Monday morning will feature a few calls--both to TDS and to our regional cable provider.
    I had been investigating a cable Internet on-ramp as a backup connection, but now I think we should just move our account away from TDS. My sales rep will hear from me on Monday morning.

    • Say to them corporate-speak: "We fear that your current entanglement with the City Hall would have a negative impact on our business goodwill as a reason for associating with you. Hence we would like to move our business to another Telco who would not impact our business goodwill."
      Goodwill is fungible. But it is also most sought. For instance being a supporter of Enron didn't do many corporates any good. Same goes with saying you are a supplier to KBR.
      Put your company's bottom line on the line and state to

  • by PPH ( 736903 ) on Saturday November 08, 2008 @02:04PM (#25688503)

    Having been in the private utility biz, I know better than to say, "Not economically feasible. We're not building it." We always said, "Not at this time, but it is in our long term plans".

    Within the territory in which we were franchised to operate, we were required to build out to any customer requesting service. As long as we were compensated for expenses beyond those for which revenue would cover costs. That means, as long as the customer paid the extra cost, it was always economically viable.

    • by dkf ( 304284 )

      Having been in the private utility biz, I know better than to say, "Not economically feasible. We're not building it." We always said, "Not at this time, but it is in our long term plans".

      Of course, the response to that is "Can you give an estimate on the schedule for the roll-out on that area?" (or an equivalent phrase) which leaves you thoroughly on the spot. You have to be very careful when you use Sometime as the answer, as most folks (rightly) interpret it as (Practically) Never; the rest will sue when they figure they've been lied to.

      None of that is special to utilities.

      • by PPH ( 736903 )

        The answer: "When the potential customer base reaches our economic break-even criteria. Or sooner, if customers subsidize the build-out". Which is absolutely the truth. You can't give an estimate in terms of number of years since you don't know how fast the market will expand.

        The answer, "We're not building out there" implies that there is some criteria beyond pure economics driving your answer. Like an agreement to divide the market between competing suppliers (cable gets this town for broadband, telco ge

  • by MarkvW ( 1037596 ) on Saturday November 08, 2008 @02:16PM (#25688567)

    Think back to the pre-1930s where power companies refused to provide service to rural communities and small towns because the profit margins were not great enough for them to bother. Only the Great Depression and Roosevelt got public power to those communities.

    The "free market" ignored those small communities. People forget real fast and history repeats itself.

    • Re: (Score:3, Interesting)

      by exi1ed0ne ( 647852 ) *

      Now this is something that I've been thinking about recently. Was the decision to force electrification actually beneficial for the long term? Short term - yes, hands down. However, who's to say what other solutions those small communities would have come up with. If people want something bad enough, they will get it. Would renewable energy be more common today if we didn't push for the current energy infrastructure? Would our thirst for watts be less? Would the current infrastructure be as overloade

      • Re: (Score:3, Insightful)

        by thisissilly ( 676875 )
        They didn't "force" electrification, instead the Government provided loans to local electrification cooperatives -- in other words, the small communities that you are talking about. See []
        Read up on it, the situation is very analogous: large companies refusing to provide service, yet claiming the government was not allowed to compete with them or regulate them.
    • by Hadlock ( 143607 )

      That would help explain Roosevelt's outstanding election margin of win(s) I keep seeing in the newspaper charts.

  • how this is 'competition' and 'free market'.
    • Who said it was?
    • It Isn't (Score:4, Insightful)

      by maz2331 ( 1104901 ) on Saturday November 08, 2008 @03:24PM (#25688989)

      This is just an attempt to use the courts as a weapon to protect a monopoly position. The tip of that weapon is an injunction delaying the public network while the private one is built, resulting in a "win" for the company regardless of the actual outcome of the lawsuit.

      Really, it just amounts to a "hack" of the legal system. The process itself can be hijacked to delay competitors, or even bankrupt them outright through legal fees and other costs in the pre-trial parts of a case.

    • how this is 'competition' and 'free market'.

      I'm a little confused and the whole free market concept, since market anarchists when asked respond with "we don't need to prove a negative".

      But you propose a a city design where essential services (gas, water, power, communications) are offered by both the city and private industry, well they automatically assume that's a market, and by extension justifies their idea of a free market.

      Problem is, in order to provide multiple services, you do have to spend more on your infrastructure. You need stronger pole

  • Sounds familiar (Score:2, Insightful)

    by asamad ( 658115 )

    Sounds like another american business group, with a flawed business model.

    1) Over promise / don't deliver
    2) Don't invest in the future

    3) When the users get sick of it sue them when they try and do
    4) Cry foul cause you monopoly goes away
    5) buy off the politicians

  • I'm curious as to what the telco is going to tell its stockholders when the city completes its system and they are stuck with all the unused infrastructure that they have built in an effort to skip ahead of the city? Spending a whole lot of money on a project that won't make any money is usually not considered a recommendation for management.

The absent ones are always at fault.